Posted: 1 Mar

3 Things You Should Consider to Help You Get a Mortgage After Bankruptcy

Purchasing a home can be a stressful experience. It can be even more nerve-wracking if you've filed for bankruptcy. The good news is that while getting mortgage after bankruptcy can be challenging, it's not impossible. Here are three important things to keep in mind when seeking a mortgage after bankruptcy.

1. You'll Need to Go Through a Waiting Period

Once your bankruptcy has been discharged, you'll need to go through a waiting period before you are considered eligible for credit. For first-time bankruptcies, this waiting period is between 9 and 21 months. For each subsequent bankruptcy, the waiting period is 2 to 3 years. Your debt will remain on your credit report for six years, but you don't have to wait that long to start rebuilding your credit and obtain a mortgage after bankruptcy. Getting a secured credit card and paying it on time for at least 2 years is a great way to improve your credit score while you wait for your bankruptcy to drop off of your credit history.

2. You May Be Charged a Higher Interest Rate

If you have less that 2 years of established credit following your discharge, you may find it difficult to obtain an affordable mortgage after bankruptcy. Lenders use your credit history as a benchmark when determining how likely you are to repay what you've borrowed. If you have no established credit history, or your credit score is below 680, you'll likely be charged an extremely high interest rate on a traditional mortgage.

3. You May Need to Consider an Alternative Mortgage Lender

If you're unable to secure a mortgage after bankruptcy through a prime lender, there are alternative lending solutions available. A mortgage broker can help you find trust companies, credit unions, and private lenders who work exclusively with people who have damaged credit.

Your bankruptcy doesn't have to mean the end of your home ownership dreams. Contact us to find out how we can help you get approved for a mortgage after bankruptcy.

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